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TMI Blog2014 (10) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It is abundantly clear that so long as the radio or television programme is received in India and intended for listening or viewing by the public in India, such activity shall be taxable service even if the physical activity of broadcasting such as encryption of signals or beaming thereof takes place outside India and any branch office, subsidiary, representative, agent or any person who is appointed by the broadcaster for selling of time slots for broadcasting of any programme or obtaining sponsorships for programme or collecting broadcasting charges on behalf of the broadcaster will be liable to pay service tax. Representative of the Foreign Broadcaster (who undertakes broadcasting in India) engaged in selling time slots or obtaining sponsorships or collecting and remitting charges, on behalf of the broadcaster has to be made liable to service tax in India, which is the express intention of the Legislature while making retrospective amendments to sections 65 (15), 65 (16) and 65 (105) (zk) of the Finance Act, 1994. Therefore, this will of the legislature has to prevail and has to be given effect to. Viewed from this perspective, the argument that such a transaction is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Madras Petrochem Ltd. (supra) relied upon by Revenue would squarely apply. invocation of extended period of time for confirmation of demand is fully justified - Decided against assessee. - APPEAL NO. ST/36/12 - Final Order No. A/1399/2014-WZB/C-I(CSTB) - Dated:- 8-9-2014 - P R Chandrasekharan and Ramesh Nair, JJ. For the Appellant : Shri. V. Sridharan, Adv For the Respondent : Shri. M. Mondal, Special Consultant JUDGEMENT Per: P.R. Chandrasekharan 1. The appeal arises from Order-in-Original No. 67/BR-67/ST/Th-I/2011 dated 20-10-2011 passed by Commissioner of Central Excise, Thane-I Commissionerate. Vide the impugned order, the ld. Adjudicating authority has confirmed a service tax demand of ₹ 7,48,56,620/- along with interest thereon and also imposing penalties under sections 76, 77 and 78 of the Finance Act, 1994 on the appellant M/s Star India Pvt. Ltd., Mumbai (SIPL in short). Aggrieved of the same, the appellant is before us. 2. Facts relevant to the case are as follows. Acting on intelligence that M/s SIPL was indulging evasion of service tax on broadcasting services', the Directorate of Central Excise Intelligence (DGC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.1 The show cause notice and the impugned order has been issued/passed by authorities not having jurisdiction. 3.2 Service provided by the broadcasting agency to the client is the taxable service. As per the circular dated 9-7-2001 issued by the CBEC, the client is the advertiser. The retrospective amendment made in the Finance Act, 2002 is clarificatory/declaratory and re-affirms the above position. As per the circular dated 9-7-2001, the appellant is liable to pay service tax only when it collects advertisement charges which happens only when advertiser is Indian. In the case of advertisers situated abroad, the appellant does not collect any service charges and these are paid directly by the foreign advertiser to M/s Star Hong Kong. Under the Indian service tax law, generally service tax is leviable only when recipient of service is in India. 3.3 Service tax is a destination based consumption tax. Since in the case of foreign advertisers, since they are outside India, the services rendered to such service recipients are not taxable in India at all. Reliance is placed on the decision of the Tribunal in the case of SGS India Pvt. Ltd. [2011 (24) STR 360] wherein it was hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is a small percentage. Therefore, the appellant cannot be attributed with intention to evade payment of service tax. Therefore, the appellant was under the bonafide belief that they were not liable to pay service tax when Star Hong Kong collects advertisement charges directly from the foreign advertisers. 3.8 The ST 3 return as it stood at the material point required the appellant to show what it had collected. Therefore, in respect of collection made by Star Hong Kong, there was no need to declare the same in the said return. Hence no suppression can be alleged against the appellant. Reliance is placed on the Apex Court's decision in the case of VDM RM M RM Muthiah Chettiar [1969 74 ITR 183 (SC)] wherein it was held that an assessee was bound to disclose only those particulars mentioned in the return and by not showing such particulars, assessee cannot be deemed to have withheld material facts necessary for assessment. 3.9 In a proceeding pertaining to the period prior to 16-7-2001 regarding demand of service tax under advertising agency service, the agreement of the appellant with Star Hong Kong was produced before the department which clearly indicated that foreign a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent appointed in India or by any person who acts on its behalf in any manner;' (16) broadcasting agency or organization means any agency or organization engaged in providing service in relating to broadcasting in any manner and, in the case of a broadcasting agency or organization, having its head office situated in any place outside India, includes its branch office or subsidiary or representative in India or any agent appointed in India or any person who acts on its behalf in any manner, engaged in the activity of selling of time slots for broadcasting of any programme or obtaining sponsorships for programme or [collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electro-magnetic waves through space or through cables, direct to home signals or by any other means to cable operator, including multisystem operator or any other person on behalf of the said agency] or organisation;' 4.2 Similarly taxable service has been defined in section 65 (105) (zk) as follows:- (zk) to a client, by a broadcasting agency or organization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to Star Hong Kong for broadcasting in India cannot be classified under broadcasting services'. Since SIPL is essentially engaged in selling time slots for broadcasting on behalf of Star Hong Kong in both the situations, service tax would be leviable. 4.4 In the budget instructions issued on 16/7/2001, in respect of broadcasting services, it was clarified that the branches/subsidiaries/agents who act on behalf of foreign TV channels in selling time slots, recovering service charges and remitting the same to the foreign TV channels would be liable to pay service tax. Vide section 148 of the Finance Act, 2002, the statutory definitions of broadcasting, broadcasting agency and broadcasting services were retrospectively amended to make this position very clear. Again in the budget instructions of 2005-06 dated 27-5-2005, this position was re-iterated. 4.5 In terms of section 67 of the Finance Act, 1994, the taxable value of broadcasting is the gross amount charged by the service provider for the services provided or to be provided. Therefore SIPL ought to have included in the value of taxable service the amount received by Star Hong Kong from the advertisers. In that case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the ensuing paragraphs. 5.1 The appellant has raised the issue of jurisdiction. However, this point was not pressed by the Counsel during his oral submissions. In any case, this issue has been decided by this Tribunal in favour of Revenue in Standard Chartered Bank and Others 21-02-2013and accordingly, we hold that there is jurisdiction for the Revenue in this matter. 5.2 In the Finance Act, 2002, vide section 141, the definition of broadcasting and broadcasting agency or organization under sections 65 (15) and 65(16) were retrospectively amended to include the following:- and in the case of a broadcasting agency or organisation, having its head office situated in any place outside India, includes the activity of selling of time slots or obtaining sponsorships for broadcasting of any programme or collecting the broadcasting charges on behalf of the said agency or organisation, by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner 5.3 Similarly, the taxable service under section 65(105)(zk) was amended to specifically provide for the following:- and, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o service tax at the hands of its agent/representative in India. 5.6 From a perusal of the agreement between the appellant SIPL with Star Hong Kong dated 1-4-1999 the following picture emerges: (i) SIPL has been appointed as non-exclusive independent Representative in the territory of India to solicit television advertising for the channels, namely, Channel V, Star World, Star Plus, Star News, Star Movies and such other channels as may be added in future and to collect and remit advertisement charges. (ii) As per the agreement, invoicing for the advertisements telecast would be done by Star Hong Kong and where such payment is to be made by advertisers in Indian Rupees, Star Hong Kong will instruct the advertisers to make the payment to SIPL and where the payment is to be made in US $, the payment had to be made directly to Star Hong Kong. However, the delivery of the invoices to the advertisers on a timely basis was the responsibility of SIPL. (iii) In the case of payments to be made in US $, the advertisers also had the option of paying it in Indian Rupees to SIPL who shall responsible for remittance of such amount in US $ to Star Hong Kong after getting ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n advertisers and the invoices issued for the advertisement charges. For example, for the advertisement made for World Gold Council, Dubai, the advertising agency is M/s Ogilvy Mather Ltd. Mumbai and they have released/placed the order vide release order dated 24/10/2001 for advertisement on the appellant SIPL for the month of November, 2001 in the Star Plus Channel in various programmes such as Kahani Ghar Ghar Ki, Hum Saat Anth Hai, Kyunki Ki Saans bhi kabhi bhahu thi and so on which are all programmes broadcast in India. The advertisement caption is Glow with gold and the time slot for advertisement is 15 seconds. The dates of advertisement/broadcast is also indicated in the release order. The rate of advertisement for 10 secs is mentioned in US $ and based on the number of spots, the total cost is indicated in US $. The invoice for the same has been issued by Star Hong Kong vide invoice No. 992101 dated 15/11/2011 wherein sales office is indicated as India-Mumbai and the address for correspondence is that the appellant at Mumbai. The advertiser is shown as World Gold Council c/o Ogilvy Mather, Mumbai and payment instruction has been given as Remit to Star, Hong Kong . It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The mode of payment of the consideration for the service rendered cannot be the criteria for determination of taxable event. The taxable event is rendering of taxable service as defined in 65 (105) (zk). Merely because the payment is made in foreign currency, the nature of the taxable event does not undergo any change. It is a settled position in law as held by the hon'ble Apex Court in Bombay Tyre International [1984 (1) SCR 347] that - the levy of a tax is defined by its nature, while the measure of the tax may be assessed by its own standard. It is true that the standard adopted as the measure of the levy may indicate the nature of the tax but it does not necessarily determine it. When enacting a measure to serve as a standard for assessing the levy the legislature need not contour it along lines which spell out the character of the levy itself. A broader based standard of reference may be adopted for the purpose of determining the measure of the levy. Any standard which maintains a nexus with the essential character of the levy can be regarded as a valid basis for assessing the measure of the levy. Therefore, merely because the measure of the levy is in a foreign currenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any service rendered by a branch, subsidiary, agent or representative in India on behalf of the broadcaster who is situated outside India in relation to selling of times slots or obtaining of sponsorships or collecting and remitting service charges on behalf of the broadcaster. In view of the specific inclusion of the activity on behalf of the broadcaster located outside India, the said definition has to be given full effect to so as to achieve the object of the legislature. In British Airways PLC. [2002 (139) ELT 6 (SC)], the hon'ble apex court held as follows:- 8. While interpreting a statute the court should try to sustain its validity and give such meaning to the provisions which advance the object sought to be achieved by the enactment. The court cannot approach the enactment with a view to pick holes or to search for defects of drafting which make its working impossible. It is a cardinal principle of construction of a statute that effort should be made in construing the different provisions so that each provision will have its play and in the event of any conflict a harmonious construction should be given. The well-known principle of harmonious construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any programme and are collecting broadcasting charges on behalf of ATL/EXPAND/STAR. Therefore, there is no merit in the contention of the appellants that they are not providing taxable service. 10. In the light of the above view which we are inclined to take on the status of ATL/Expand/Star and the appellants with reference to the term broadcasting' and broadcasting agency', we find no merit in the contention of the appellant that the value of their service has to be limited to the payment made to it by ATL/Expand/Star. The entire amount paid by the advertiser/sponsorer to ATL/Expand/Star has to be treated as value of Taxable Service. We do not find any reason to take a different view in the present case from that taken by the Tribunal earlier. 5.15 The next issue for consideration is the time bar aspect. The contention of the appellant since is that they were only required to declare the consideration received in the ST3 return and in the case of foreign advertisers the consideration was paid directly to Star Hong Kong, there cannot be any mis-declaration on their part. This contention is obviously wrong. In the ST3 return, there was a column wherein the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause notice is held to be within time. Applying the above ratio to the facts of the case before us, the invocation of extended period of time to confirm the tax demand cannot be faulted at all and we hold accordingly. The hon'ble High Court of Gujarat in Salasar Dyeing Printing Mills (P) Ltd. Vs. C.C.E. C., Surat-I [2013 (290) E.L.T. 322 (Guj.)] has held that - 15. Upon reading the relevant provisions contained in Section 11A of the Act, it becomes clear that in case of duty which has not been levied or paid, or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion, wilful misstatement, suppression of facts, etc., period of service of notice on the person chargeable with such duty would be five years instead of one year provided in normal circumstances. Nowhere does this provision refer to the period of service of notice after fraud, collusion, wilful misstatement or suppression, etc. comes to the knowledge of the Department. In simple terms, the Department could recover unpaid duty up to a period of five years anterior to the date of service of notice when the case falls under proviso to sub-section (1) and such omiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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